Federation of Goldsmiths and Jewellers Associations of Malaysia (FGJAM) president Chiah Hock Yew said he is concerned that the estimated tax rate of between 5% and 10% will affect the industry.

The tax is supposed to be implemented next month, but the finance ministry said it has to be deferred as discussions with stakeholders are still needed to finalise details such as the scope of goods, and associated thresholds.

Chiah said the tax would increase the burden on businesses as gold is traded based on fluctuating market prices.

“We are concerned that consumers and investors will face repeated taxes if the HVGT is imposed (at all price levels).

“That is why we are asking for a higher threshold for gold products subject to this tax.

“We hope the government will seriously consider this to reduce the burden on consumers and the industry as a whole,” he told FMT, going on to suggest that gold jewellery be exempted from the tax.

The HVGT was first announced when Prime Minister Anwar Ibrahim, who is also the finance minister, tabled the 2024 budget last October.

He said the tax, which would be set between 5% and 10%, would be applied to items such as jewellery and watches that exceeded a certain price threshold.

In February, Anwar said the government can garner RM700 million annually from the tax.

Chiah said while demand for gold jewellery is quite strong due to the upcoming Hari Raya Aidilfitri celebration, market conditions would change when the tax comes into effect.

“The price of gold will rise, causing a decrease in consumers’ purchasing power,” he said.

“Some consumers may choose to wait for a while or choose other investments, which may pose a challenge to the industry.”